Iraq continues to struggle with slow economic growth and low living standards despite its vast natural resources, placing 106th globally out of 171 countries in the Atlantic Council’s 2026 Freedom and Prosperity Index.

The latest global ranking highlights a persistent gap between Iraq’s resource wealth and its institutional performance, leaving the nation trailing behind the majority of its regional peers.

Regional and Arab World Standings

In regional metrics, Iraq placed 14th among Arab nations. Gulf Cooperation Council (GCC) member states maintained a strong lead across the Arab world, led by the United Arab Emirates at 35th globally, followed by Qatar, Kuwait, Oman, and Saudi Arabia.

Iraq also ranked behind several North African and Levant nations, including:

• Algeria
• Tunisia
• Lebanon
• Egypt
• Morocco
• Libya

Despite its low position relative to broader Arab rankings, Iraq outperformed several nations severely impacted by ongoing conflict and internal crises, placing ahead of Syria, Mauritania, Yemen, and Sudan.

Drivers of Economic and Social Stagnation

According to analysis accompanying the index, several structural and systemic bottlenecks continue to suppress prosperity levels across Iraq and the Kurdistan Region:

• Wage and Financial Delays: Unstable salary distribution and unresolved public sector financial entitlements.
• Infrastructure and Energy Shortages: Chronic fuel shortages resulting in extended citizen queues and limited access to basic public utilities.
• Governance and Institutional Deficits: Persistent corruption within state institutions that restricts broad-based economic reform and delays development projects.

The convergence of these institutional challenges keeps Iraq anchored in the bottom half of global prosperity metrics.